U.S. service center total carbon steel shipments increased by 1.7% in February on a three month moving average (3MMA) basis. There was considerable variation between product groups as plate, structural and sheet shipments rose while bar & shapes and pipe & tube posted declines.
Table 1 shows percentage change results for shipments, daily intake and inventory level. In all cases the percentage change references 3MMA year on year (y/y). For shipments and inventory, three columns of data are listed offering 12, 24 and 36 month changes. Daily intake is up solidly across the board y/y, ranging from a low of +0.3% for bar & shapes to a surge of 32.9% for plate. Structural intake increased 11.3%, sheet jumped 12.5% and pipe & tube rose 3.7%. Overall inventory levels declined by 7.4% y/y, pulled down by a 14.2% drop for pipe & tube and a 10.5% decrease for sheet. Months on hand (MOH) for bar & shapes stood at 2.40 (3MMA), down from a recent high of 2.73 last July. Structural MOH increased to 3.07 its highest level since June.
Figure 1 paints a picture of where we are today relative to the peak market in 2007 and 2008. This chart references 2007 at 100% and compares subsequent shipments as a percent of the peak. Flat rolled products shipments have fared better than longs since the great recession albeit with large gyrations along the timeline. Sheet currently stands at 80.3% with plate at 69.0% of the 2007 shipment level. Pipe & tube recorded a level of 65.0% in February, followed by structural’s at 50.7% with bar & shapes at 54.7%. From this analysis we can see that service center sales still have a ways to go to call this a healthy market. There are however, some encouraging signs on the horizon that point to a stronger year ahead. These include a solid non-residential construction outlook, robust job creation, strong consumer and business confidence, and several successful trade actions. In addition the new administration in Washington has been promising to bring manufacturing jobs back to the US as well spending vast sums on our crumbling infrastructure.
At Gerdau we scrutinize the MSCI release every month searching for clues on the industry’s performance. It’s important to us as a significant supplier of long steel products to our service center customers. It’s equally important to keep our steel consuming consumers informed.